Monday, December 19, 2005

Seasonal Fluctuations Causing Cash Flow Woes?

One of the big problems many business owners experience is seasonal fluctuations in sales. It is a leading cause of cash flow problems for small businesses. A period of feasting is often followed by a period of famine. Moving beyond that feast and famine cycle is possible by developing other products and services to overcome the famine times.

Here are some examples:

Retailers often had a huge increase in sales during December, followed by a very dead January. Now, the ubiquitous gift card has helped to lift January out of the doldrums by bringing people out to the stores after the Christmas season. Although the income from the gift cards is actually received in December, customers always end up spending more than the gift card is worth. The result is a bump in sales for a historically famine-like month.

I once owned a tree pruning and removal service. Our busy season was from March through November. We spent the summer cutting the trees and splitting the wood for firewood and we spent the winter selling the firewood.

Landscape companies spend the summers landscaping and the winters plowing.

In my business during December, the sales of my cash flow information product drop off but the accounting side of my business picks up with businesses needing QuickBooks cleanups and year end accounting tasks.

Your seasonal businesses don’t necessarily have to be related. One of my teachers in high school spent the school year teaching and the summers running an ice cream stand.

Developing products and services that complement your busy times and boost up your slow times goes a long way towards smoothing out your cash flow.

Of course, the other option for slow times is to work on those “someday” projects or even to take time off. The trick is to get your cash flow to the point where the slow times are something you can look forward to for a little rest and relaxation instead of times of panic. Getting there is a matter of planning and executing your plan.

To all who celebrate this blessed season, a very Merry Christmas.

Until next time,

Caroline Jordan
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